Welcome back again to SCG Analyst Conference for the First Quarter of 2024. My name is Pavini from IR team, and I will be the moderator for today's session. We highly appreciate all guests who come on-site today, and also those who join us online as well. Our management are here today to provide you the consolidated results of the first quarter business updates and outlook. We will later open the floor up for the questions after the presentation. Today's presenter following the presentation sequences comprise of SCG management, led by Thammasak Sethaudom, the CEO of SCG, who will walk you through the consolidated results, SCG Cleanergy business update, and consolidated outlook. SCGC management led by Sakchai Patiparnpreechavud, CEO and President of SCGC.
Next are our management from businesses related to cement and construction, beginning with Surachai Nimlaor, President of SCG Cement and Green Solutions business. Wiroat Rattanachaisit, President of SCG Smart Living and SCG Distribution and Retail businesses. Followed by Chantanida Sarigaphuti, CFO of SCG, who will be presenting SCGP and consolidated financial result. Last but not least, for the sustainability part, this quarter will be highlighted by Suracha Udomsak, Chief Innovation Officer of SCGC. Before session begins, I would like to give a little note that Tanawong Areeratchakul, our CEO and President of SCGC, will join this session for his last session for Analyst Conference, and he will pass his role to Sakchai Patiparnpreechavud, which will be effective on May 1.
I would like to pass the floor to Thammasak to say farewell to Tanawong first, and then please, begin the program. Please.
Thank you. First of all, thank you for attending this morning discussion. We have a little ceremony to thank our big brother who stayed with us for a very long time. I used to work for Tanawong for several years in Vietnam. I really respect Tanawong and also learn a lot from him. One of the thing that still linger in my mind is the line-by-line checking in term of the schedule, in term of the detail, that we really have to make thing right. He always mention that focus on the important issue, make sure that we get into the detail and make it right. That still helping me up until now. Tanawong has a numerous contribution to SCG from operation in chemical, 10-year contribution at the ROC. You can see that ROC is one of the best-in-class asset in the world.
Pioneer in the Long Son Petrochemicals in Vietnam. That time is a very tough time. That's what I know. Leading the SCG corporates toward the vision of innovation and go regional. Contribution to SCG Packaging after rebranding from SCG Paper into SCG Packaging. The initiative from vision to realities of the SCGC Green Polymer. He start a lot of SCGC Green Polymer lately, and a key driver to inclusive green growth. Not only myself, but all of the SCG management have a beautiful memory with Tanawong , and thank you for all the contribution. Please don't mistake that he will not go any far. He still be my advisor, SCG advisor, helping us for the continuities, and we will still get his contribution over the next few more years, at least. Thank you, Tanawong .
Okay. That's the warm note. Let's start with something that. Okay. On the consolidated result, but I would like to start with the OFAC, just to make sure that I provide a good information to everyone. Even though we filing the document to SET a few days ago, but since this is probably one of the key concern for many parties, let me address this one upfront.
If you remember that probably long time ago in 2005, we start the investment in Iran. At that time, Iran and the U.S. relationship is very well. Okay? We follow the opportunities and invest. Of course, there is the on-and-off relationship. Then when the U.S. put sanction on Iran, we stop. When another time they lift sanction, we start. Because we already have asset at that time. Okay. On and off this kind of relationship and geopolitics start to concern us long time ago. Then we decide to exit.
We exit in 2018. Basically that's done. All the sale from when everything is done, we exit. The investigation to the transaction start in the 2017 and 2018, which to our surprise also, we fully comply and we are very open to all the transactions. We show fully comply and give cooperation to the OFAC. You could see that's not our intention to breach the sanction, but the sanction specify that you still can sell it, but you cannot use US dollar. This is something that start to confuse the front line. We recognize that and then I think the best way for us and for everyone is to make a settle agreement instead of have the legal litigation, which is very costly.
We make a settle agreement on this. Of course, we implement the internal policy to make sure that this kind the issue cannot re-happen again. Not just the policy, actually it involve a lot of training, communication, make sure that anything that change in the regulation, which the central legal department will have to observe and monitors, then we have to communicate to the front line. Okay. You could see that we minimize the risk by exit from many asset that have some risky of the quick policy change. That kind of thing we have done. Okay.
In term of the impact of $20 million, it's in last year. It's not in this year, so it's already done. I could say that we already exit. We already settle. We already implement all the procedure and process and even including the training. I think it should be over and we still vigilant and we still proactive on any policy change in the future. Of course it's not be anything about the Iran because we already exit, but maybe somewhere else that we need to be careful. That's the first note I want to address before we get into the business performance.
Next, I would like to give some highlight on the first quarter this year. Let me explain into two step, the macro and our initiative. You could see that on the macro side, Thailand economy start to improve. We get benefit from tourists, 9 million people coming in. This is very helpful. FDI, whether you like it or not, from mainland China, for many is coming in is also helpful in term of the economic progress. The government policy that try to stimulate the economy and consumption, that also in a way help. We see some good positive improvement in the macro sentiment.
That's in the Thailand, but SCG about close to 50% is outside Thailand. Thailand is just 56% of the sale revenue. 44% is in the region. So Vietnam. How about Vietnam? Vietnam in term of the consumption now you see a good improvement. But on the construction and real estate project, still pretty slow. It start to slowly recover, but it take more time because of the anti-corruption campaigns that still remain in Vietnam. That damps the mood of the investment. That will take time to recover and I hope that toward the fourth quarter this year, you're going to see a good, a clear improvement on this.
In Indonesia, I see a upbeat situation. I just came back from Indonesia. You see that the continuity of the political party, that also helpful and the FDI flow into the Indonesia and competitive on the energy cost. That help Indonesia, and also the mineral that attract the FDI. Indonesia is good. Philippines is getting better and better. Cambodia and Laos is still quite slow. That what we can say. Geopolitics is still very worrisome. Whether you like it or not, this is going to be a worrisome for the next few years, and it could impact the business. That what I can say.
On the chemical, we still maintain the expected recovery in the trend of the second half of this year. What we do is, another thing is if you listen to Wichan a few days ago, the packaging is recovering because packaging is linked to the consumer. Consumer will get better first, the fastest recovery, and then you're going to see the housing and constructions follow the trend. That's a good sign.
What we have done over the past quarter, we focus on the SCG Low Carbon Cement, the big SCG Low Carbon Cement bag. That the new SCG Low Carbon Cement that we are pushing. It helping us on the top line and helping us on the bottom line. We strengthen our cost position by ramping up the alternative fuels that I always say this is important. We ramp up to 47%. You will listen to Sakchai that this will help us reduce the cost, make us more competitive. That the major driver for better performance of the cement and construction.
SCG Chemicals has post a recovery on the QoQ improvement. You could see from Q4 to Q1 it's quite a big improvement. Green Polymers still make inroads in the new grade. We still fighting on the quarter-by-quarter situation, but we never deviate from our long-term target of the green growth, the inclusive green growth. SCG Packaging improved on the year-on-year, the QoQ. You see that top line, bottom line improve because the consumer segment started to recover first. SCG Decor is on track. They just unveiled the competitive sales growth target as a 2x. That is the ambition that they try to do and that performance also get better QoQ. SCG still have a very strong financial position with good cash on hand. This is the balancing portion for our stabilities.
May I quickly go through the first quarter sale is THB 124 billion up QoQ, but still down year-on-year. Up QoQ because of the improvement from almost all business. Year-on-year is down because of the cement and construction not fully recover yet, but we start to see QoQ improvement. EBITDA has registered THB 12.6 billion up QoQ and up 4% year-on-year. You could see that even though the sale on the year-on-year, we are not beat the last year, but our EBITDA already beat, thanks to our initiative on the green movement on the top line and on the bottom line.
Profit for the period registered at THB 2.4 billion. On the QoQ, clearly a big improvement because last quarter we make impairment and loss, so that is why it is up. If you look at the non-recurring, it is still pretty good improvement. If you look at the year-on-year, still weaker on the year-on-year compared to last year, mainly because of the chemical is still gradually improve. That one I can say. From segment profit by segment, SCG Packaging now 29%, and Cement and Green Solutions 28%, and the SCG Smart Living and SCG Distribution and Retail are 14%. SCG Decor is now 4%. You could see that the old CBM collectively on the CGS, SCG Smart Living and SCG Decor, it is still a big chunk. The investment still have a good contribution to our bottom line.
If you look at the destination, Thailand is 56%, ASEAN ex Thailand is 26%. This is up 5% year-on-year, and the other is 18%. Strategic direction still toward the green growth. We know that if we figure out the right solution of the green growth, that will help us on the top line and on the bottom line. We make it very practical for this strategy shift. Let me pass to Sakchai.
Good morning. This is my first time. First time with the business in this year. Everyone knows petrochemicals is in the trough cycle, but it is going to be better. Look at this oil price firmers. You see all the price, especially the byproducts. The byproducts you could see in the yellow colors. That jumped up. Actually, because of the less supply of these byproducts. Look at the olefin chains. Actually, the cost push that make the price up, and we can pass on some cost to the products. The gap of the chain, so you look at the PE chains, more or less same as the last quarters, probably drop down a little bit. PP chains increased from 290s up to 300-something. Actually, this is also because of the demand in the first quarters of PP, especially in Southeast Asia, is quite strong.
Look at the sale volumes. The sale volume of the first quarters dropped down to 300,000 tons. It is about 306,000 tons. This is because of our rationalizations. One of the crackers we shut down almost a quarter. That makes the overalls of the sale volume of the olefin chain drop down. The vinyl chains is also actually really challenging because the demand side of PVC are still weak. You know where the PVC demand link to the constructions. The construction in the region, especially in China, is weak. That makes the PVC price weak. At the same time, the cost pushed by the EDC. EDC is the first quarters actually is very, very tight because of the turnaround of the key supplier in the Middle East. Overall, PVC chain, the first quarters, the gaps dropped down sharply from the last quarters from 200-something to 270.
The volumes. You may see the volumes polyolefin is also down. Vinyl chain is also down a little bit. Actually, this is by intentions to manage our business during this tough cycles. We have to make ourselves flexible. In some time, we maximize sale. Sometimes we slow down the production. Just want to make sure this is maximize the company performance during the downturn. The vinyl chain, the volumes, we shut down one VCM plant, that is why the overall volume dropped down to 154,000.
Look at the financial performance. The revenues dropped down to THB 45,000 because of the volume, as I mentioned. EBITDA is better than the last quarters. You look at the blue colors, that is from the operation. Of course, the first quarter is normally this off-season of the dividend payment. Overall, even though it is less than the last quarter, but from the operation, there is a big improvement.
Look at the net profit. Actually, with our LSP, overall operation in Thailand and the rest are still positive. But the first quarter, our LSP are still under test run. That is why overall net profit negative, THB -1,866 million.
Look at the second quarters. Actually, it seems economies improve a little bit. We also expect the demand in the second quarter improve a little bit. The supply side, there are positive and negatives. The positive side, most of the producers in the maintenance every years, coming to the second quarters, the producer, they have the schedule maintenance. At the same time, also have the new capacity coming up in China. All in all, the supply side, plus or minus, will be the same. We expect the demand improve a little bit. Anyway, even though costs are still pushing because of the political tensions at this moment. But we expect the gap of polyolefin chain will be maintained.
The vinyl chain, the demand, especially from the constructions PVC resin, that is still weak. Anyway, the good sides, in the beginning I said that because of the feedstock of this vinyl chain is really high. But the second quarters, the EDC producer just back resume the productions. So the price is lower. We expect the PVC chain in the second quarter will be much better.
About our green initiative, as Thammasak used to promise to achieve our green products sale in the next 2030s up to 1 million tons. That is this quarter we can achieve 38,000 tons. Actually, it is on our plan. Highlight of the clean business. Our Pothikul asset named Sirplaste, we already installed a new unit. This make up really high quality of PCR, so the premium should be better. Overall surplus capacity, now we can run up to 45,000 tons a year.
Another highlight is we have the activities with HomePro. This is a kind of the closed-loop circular electrical appliance. We work with them. We bring back the used electrical appliance and to make the recycle resin and supply to the electrical appliance company.
Update LSP, from the last quarter, Thammasak just already informed. We already successfully started up the downstream. Actually, the downstream could run fully, but the first quarter, actually, we tried to ramp up the capacity of the upstream. We found some technical difficulty in the equipment. That is why we decided to shut down again and to do the maintenance and also some modification in order to ensure the operation this time. We expect to feed in the tractor again in July. Also, it will probably take another two, three weeks up to one month to fully run the downstream in August.
That is all of my part. I pass to Surachai.
Thank you. Thank you, Sakchai . Good morning . May I start from the top line? In this quarter, the revenue from sale in the first quarter dropped around 6%, mainly from non-Thai operation and soft demand in construction market. EBITDA and profit for this period increased around 14% and 46% year-on-year as a result of our effort, mostly from our energy transition projects.
Look at the Thai market. Overall demand in the first quarter decreased around 10% year-on-year. It is expected to see some recovery in demand growth in the second half of this year, mainly from government budget. The situation in ASEAN, you can see positive growth in Indonesia and Cambodia compared to the same period last year. The ready-mix concrete decreased 6% aligned with our cement demand growth.
In the first quarter, our alternative fuel usage has reached 47%, increased 5% from the previous quarter, mainly from developing a new decarbonization technology and also the replacement of our ordinary Portland cement which low carbon cement has increased from 81%- 85%. We still are focused on the decarbonization project. In the first quarter, our decarbonization projects got approved by BOI as the first low carbon projects in cement business to get tax privilege. As a part of our decarbonization roadmap, we continue launching the new carbons products for various application to serve our customer segment. We also have rebranded our product from SCG Hybrid Cement to SCG Low Carbon Cement for clearer recognition. We still launch the second generation of low carbon cement, which is better property and lower carbon emission in May this year.
Over the past many years, we have been working on our decarbonization roadmap by developing and investing in various types of decarbonization technology as well as having innovative business models to secure the supply of green energy. For the outlook, we expect to see the recovery in Thailand construction in the second half of this year, driven by the government projects while seeing continued growth in Indonesia and recovery in other markets. We will continue working on cost reduction by increasing our alternative fuel usage. For the regional cost reduction by using alternative fuel is our common strategy, and we are still also implementing the marketing strategies, which are customized based on competitive landscape in each country. For the decarbonization, we are still on the pathway to achieve the net zero target.
It can be seen that our cement business can do green and growth at the same time. That is all for the Cement and Green Solutions business. May I pass to Wiroat.
Good morning. As my current responsibility area includes the SCG Smart Living and SCG Distribution and Retail, I will cover business in the market and movement. Our revenues decreased 3% year-on-year from the softened demand in medium to low segment, but increased 6% QoQ, driven by strong seasonal sales. In terms of the EBITDA outgrew 34% year-on-year and 55% QoQ, thanks to cost reduction, operational improvement, and better performance in domestic distribution. In terms of the net profit, it grew year-on-year and QoQ, following by the EBITDA. For the market situation, in Thai building material market situation, building material dropped 6.5% due to the slow market in overall segment, except the commercial. For the regional demand was low in the most part. However, we anticipate gradually improving market in both Thailand and regionals.
The SCG Smart Living Business highlight, we made a significant progress toward inclusive green goals as following. For the smart building material system, we collaborate with the Café Amazon to innovate a SCG Green Choice product called SCG Modeena Coff, made from used coffee grounds and renewable fiber. Also, we were recognized as the 2023 and 2024 Thailand's Most Admired Company and Brand by BrandAge. We continue to enhance cost competitiveness to alternative energy source, such as solar power, which now we use as around 19% of total energy consumption. The smart solution, we launched our new brand, ONNEX by SCG, to move toward to solution for sustainable society, which will cover in four main area: energy, air, safety, and controls. We also grew energy business with a 99% year-on-year increased solar cells and expand our technology for both residential, commercial, and industrial.
For the distribution and retail business highlight. Urbanice is a former SCG startup, offer community management platform for residential in condominium and housing village. In collaboration with The LivingOS, is a specialist in property management system. The cooperation make the energetic platform become number one online property management in Thailand. SCG International continued mission to drive the smart green mobility by collaboration with the CP Foton to provide both four and six wheel for EV truck for customer.
Looking forward for the rest of the years. We anticipate for recovery of Thai market in both government and private segment. For regional perspective, recovery be seen in some country. We aim to achieve inclusive green growth with comprehensive strategy, such as grow sale in SCG Green Choice product and smart solution, improve cost competitiveness to solar energy, carry on with platform that help enhance supply chain process efficiencies, continue to strengthen our presence in ASEAN. That's for all my part.
Another one is the SCG Decor. For the SCG Decor performance report to assess in this first quarter, the revenues decrease of 7% year-on-year due to the softened market. Consequently to reduction of revenue, both EBITDA and profit is growing year-on-year and QoQ. We were enhanced and driven by the result of continued effort in operation efficiency cost and energy saving project together with the gradually decline of the energy price. For the SCG Decor target revenue 2x in 2013. SCG Decor has declared aspiration double revenue in 2013. For SCG Decor, we aspire double our revenue by four key strategy.
The growth driven for our decor surface business include the establishment, a new tile plant in South Vietnam, expansion of HVA product portfolio, and accelerate sale of high growth products, such as SPC and Glazed Porcelain Tiles. For the bathroom business, growth will be supported by ASEAN. Business expand to our decor surface business percent in ASEAN. We were exploring opportunity to establish the production plant in ASEAN. For the complementary product growth strategy, SCGD continue to drive growth like adhesive, grout, door, window, and countertop. Lastly, M&A will also be one of an important engine to grow the business in the future. That's for on my part.
Good morning. I'm very pleased to present SCG Packaging, because you're going to see all the green arrows in our category. We have a solid performance of SCG Packaging in first quarter. Sales, EBITDA, and net profit grew both year-on-year and QoQ. Sales revenue was about THB 34 billion. EBITDA was THB 5.1 billion.
As I mentioned to you, I think every quarter that the management of SCG Packaging has put emphasis on the continuous efficiency management and the cost saving. You can see that the result in the improvement in the net profit along the pickup in the market. Net profit was about THB 1.5 billion in the first quarter. If you look at the Thailand and Vietnam, both countries perform than expectation. Indonesia was a bit weaker, but there was a good side that the domestic sales volume has increased. And also, we have seen the price improvement in Indonesia as well.
Moving on to some financial figures. Starting with the net debt. Total debt at the end of first quarter was THB 362 billion . And we have cash on hand at the end of March at THB 28 billion. So net debt stood at THB 283 billion at the end of March. Net debt to equity remain unchanged at 0.6x . While net debt to EBITDA remains roughly at about 5.2x .
In terms of the capital expenditure and investment, during the first quarter, we spent roughly about THB 9.4 billion . And if you see top right-hand corner on the pie chart, more than half was spent by the chemical business unit. And most of that was spent through LSP. Our target of the CapEx spending remains unchanged at the THB 40 billion for this year. And that, as I mentioned, that excludes the share acquisition of Duy Tan that will take place this quarter. And the payment is roughly going to happen in third quarter. That is about THB 22 billion, THB 23 billion .
On the financials, I would say our financial position remains very solid. As I mentioned, cash on hand, THB 28 billion . In terms of the long-term debt, 20% comes from debenture. And with the recent issuance of debenture that completed on April 1st, we still receive very strong response and a very high subscription rate, about 90% from our bond holders. Interest in terms of the portfolio, the fixed portion now is about 93%. And in the first quarter, our cost of fund is roughly about 3.3%, which was better than fourth quarter and also the first quarter of last year. In terms of the currency mix, about three quarters is in Thai baht and remaining in U.S. dollar. That conclude my part. Then move on to Suracha .
Okay, so I will explain about our progress on the ESG. So in term of net zero commitment that we are going to get to 25% reduction in 2030 and from the base year of 2020. So from the graph, you can see that we are still making good progress, good stride. And one of the main contributions is, as mentioned by Cement and Green Solutions, that we have been very quite successful in terms of using low carbon alternative fuel, mainly the biomass. So this quarter we ramp it up to 47% for Thailand operation, which mean that we take out about 500,000 tons of coal from the fuel pool.
And I think the other thing that we also making very good progress as my business colleague mentioned about the low carbon product. We make about 53% of the revenue from the low carbon type products, and we were able to take out the CO2, almost 230,000 tons of carbon dioxide off the table. That is very good and cement is the main contributor for that. This is just to recap all the SCG Green Choice low carbon product that all our business unit is driving. For chemical is a SCGC Green Polymer that focus on four pillar, reduce, recyclable, recycle and renewable. For the low carbon cement and concrete, we are making good progress to replace the conventional OPC with the low carbon type cement and concrete. For packaging, they have a Green Carton, which is one of the best in the world in term of getting the strength with the less material.
The last one, I think, this is more on the society as a whole. We are the driving force for the Saraburi Sandbox low carbon city. We use our strength to bring multiple stakeholder from both Thailand and international to the table and to drive projects in Saraburi to make progress on low carbon. We are running about 17 projects that are active and to make the Thailand to be the leader and showcase for low carbon city. That is all for the presentation. Thank you.
Thank you. Just forget to tell you that Chana is in the conference on the fair electricity price. Very important. Chana now at the moment talking about the grid modernization and recommendation. That is why I say please go to talk to that forum and Dr. Suracha helping to fill in. Okay. Then we work as a team as you know.
On the clean energy part, the install capacity is now ramp up to 207 MW. You see that we are accumulating the green megawatt. Today up to now if including the signed deal we have 467 MW. So in line with our target for this year. Green megawatt is something that we are doing, and we adding more and more.
Rondo is still special important for us. We already sign up the 20 customer in the design engineering. This is the h eat battery that we are talking about. Just to recap very quickly. This h eat battery is one of the key piece, very important piece of the industry decarbonization because it can replace the boiler. Any steam generation or heat generation you can use the heat battery. We are very pleased to announce that we will install the first unit in Thailand because we working with many customer in the region and our partner Rondo Energy are working in U.S., in Europe and also in Middle East. We are designing and working to install the first unit in Thailand in our cement plant. This is going to be a good demonstration.
And again, just to show you that the economy is talking about this heat battery as the very important piece of equipment, mainly because this is a cheaper, more competitive compared to the electric one. If you really want to succeed on the decarbonization of the global decarbonization, you need something that is very competitive and very economical to do so. John , the founder of this Rondo, kindly mentioned SCG as an investor and also the supporter of the thermal media. So SCG Cleanergy, we still are moving on with the clean energies.
For the summary and the outlook, may I start with overall Q1 performance actually improved from quarter-to-quarter, driven by internal effort of the green initiative. You could see that the market for the cement is not that good yet. But our performance got better because of our alternative fuels, our green cement that we are launching. This gives me a little bit of confidence that the green growth is possible, so that is something already evident.
Momentum to continue, particularly in the second half of this year. That is why we start to see because you see Thailand, economic condition should get better. The government disbursement is already on the way. Thai infrastructure, Thai fundamental will get better. Stimulus policy and tourist arrival will also play a good part. Sign of the emerging consumer growth, also you could see from the packaging. When we look at this, the economic situation, we want to see an early sign of the consumption. That is a good leading indicator for the other business.
Chemicals, especially on the polyethylene. The margin tends to recover in the second half of this year. Mainly because if you look at the graph over the past four years, the capacity addition is around 5%. Last year, 4%. But this year we are talking about 2.4%. That naturally when the global GDP improves and the supply addition slows down, you are going to see a more balance of the demand and supply. That is why we predict, in the second half, on the PE thing to start to improve. Anyway, there are still many uncertainties on the geopolitics. At the moment, the oil price is around $80-$90. If the geopolitic becomes a regional issue, the oil price could jump up further. That is something we have to be mindful. Even though we feel that before the U.S. president election, everyone will try to calm down the situation. That is also helpful.
Our focus, our priorities. Number one is we want to reduce our energy cost and also at the same time reduce our carbon emission. The alternative fuels that Surachai is pushing, we need to run faster because every tonnage that you can add will help us to achieve on the better performance and also on the decarbonization. The CapEx we spend on the green product, green energy, and digital technology. I am not talking a lot about the digital technologies, but we do utilize those digital technologies, AI.
Financial strength and cash on hand is still very needed. Many people ask why we still hold quite high cash. Mainly because of the uncertainty that we are facing around the world. That is something we need to make a stability. So people is our stability. And fully commit toward the green product, highlighted by the SCG Low Carbon Cement, SCGC Green Polymer , and LSP as Sakchai talking about the CODs in August. Our priority for the next few quarters come.